113 S627 IS: Medical Innovation Prize Fund Act
U.S. Senate
2013-03-20
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as
the Medical Innovation Prize Fund
Act
.
2.Congress makes the following
findings:
(1)The development of new medicines and
vaccines is necessary to improve health care outcomes.
(2)Market exclusivity for new products is an
expensive, inefficient, and unfair mechanism to reward investments in new
products.
(3)By de-linking research and development
incentives from product prices, and by eliminating legal monopolies to sell
products, it is possible to induce investments that are medically more
important, procure products at low prices from competitive suppliers, radically
lower pricing barriers for access to new medicines, reduce wasteful marketing
and research and development activities, and dramatically lower the overall
costs of acquiring innovation, while expanding access to that
innovation.
(4)By funding innovation prizes at .55 percent
of gross domestic product, the United States would provide more than
$86,000,000,000 in rewards for successful innovation in 2012.
(5)The development of new medicines benefits
from greater sharing of knowledge, data, materials, and technologies.
3.It is the purpose of this Act to provide
incentives to encourage entities to invest in research and development of new
medicines and to share knowledge, data, materials, and technology, through the
establishment of a Medical Innovation Prize Fund, while enhancing access to
such medicines by eliminating legal monopolies on the manufacture,
distribution, and sale of such medicines.
4.In this Act:
(1)The term biological product has the meaning
given such term in section 351 of the Public Health Service Act (42 U.S.C.
262).
(2)The
term Board
means the Board of Trustees for the Fund for Medical
Innovation Prizes established under section 7.
(3)The
term drug has the meaning given such term in section 201 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321).
(4)The
term Fund means the Fund for Medical Innovation Prizes established
under section 6.
(5)The term market clearance means the
approval of an application under section 505 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355) or the approval of a biologics license application
under subsection (a) of section 351 of the Public Health Service Act (42 U.S.C.
262).
5.Elimination of
exclusive rights to market drugs and biological products
(a)Notwithstanding title 35, United States Code, relevant
provisions of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.)
(including amendments made by the Drug Price Competition and Patent Term
Restoration Act of 1984 (Public Law 98–417; commonly referred to as the
Hatch-Waxman Act)), the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (Public Law 108–173), and any other provision of
law providing any patent right or exclusive marketing period for any drug,
biological product, or manufacturing process for a drug or biological product
(such as pediatric extensions under section 505A of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355a) or orphan drug marketing exclusivity under
subchapter B of chapter V of such Act (21 U.S.C. 360aa et seq.)), no person
shall have the right to exclusively manufacture, distribute, sell, or use a
drug, a biological product, or a manufacturing process for a drug or biological
product in interstate commerce, including the exclusive right to rely on health
registration data or the 30-month stay-of-effectiveness period for Orange Book
patents under section 505(j) of such Act (21 U.S.C. 355(j)).
(b)A
person that is eligible for prize payments from the Fund as provided for in
sections 9, 10, or 11 shall receive such payments—
(1)in lieu of any
remuneration the person would have otherwise received for the exclusive
marketing, distribution, sale, or use of a drug, biological product, or
manufacturing process for a drug or biological product but for the application
of subsection (a); and
(2)in addition to
any other remuneration that such person receives by reason of the nonexclusive
marketing, distribution, sale, or use of the drug, biological product, or
manufacturing process for a drug or biological product.
(c)This
section shall apply only with respect to the marketing, distribution, sale, or
use of a drug, a biological product, or a manufacturing process for a drug or
biological product that occurs on or after October 1, 2014.
6.Fund for medical
innovation prizes
(a)There
is hereby established in the Treasury of the United States a revolving fund to
be known as the Fund for Medical Innovation Prizes, which shall
consist of amounts appropriated to the Fund and amounts credited to the Fund
under subsection (c).
(b)Amounts in the Fund shall be available to the Board,
subject to section 17(c), for the purpose of carrying out this Act.
(c)Amounts
credited to the FundThe Secretary of the Treasury shall credit
to the Fund the interest on, and the proceeds from sale or redemption of,
obligations held in the Fund.
7.Board of
trustees for the Fund
(a)There
is hereby established (as a permanent, independent establishment in the
executive branch) a Board of Trustees for the Fund for Medical Innovation
Prizes.
(b)The
Board shall be composed of 13 members, including—
(1)the Administrator
of the Centers for Medicare & Medicaid Services;
(2)the Commissioner
of Food and Drugs;
(3)the Director of
the National Institutes of Health;
(4)the Director of
the Centers for Disease Control and Prevention; and
(5)9 individuals to
be appointed by the President, with the advice and consent of the Senate, of
which—
(A)2 shall be
representatives of businesses that provide health insurance to
employees;
(B)2 shall be
representatives of entities that provide health insurance and contribute to the
co-funding of the Fund for Medical Innovation Prizes under section 17;
(C)2 shall be
representatives of the medical research and development sector, including at
least 1 representative of the nonprofit private medical research and
development sector; and
(D)3 shall be
representatives of consumer and patient interests, including at least one
representative of patients suffering from orphan diseases.
(c)
(1)Except as provided in paragraph (2), each member
appointed to the Board under subsection (b)(5) shall be appointed for a term of
4 years.
(2)Terms of
initial appointeesAs designated by the President at the time of
appointment, of the members first appointed to the Board under subsection
(b)(5)—
(A)5 members shall
be appointed for a term of 4 years; and
(B)4 members shall
be appointed for a term of 2 years.
(d)Any
member of the Board appointed to fill a vacancy occurring before the expiration
of the term for which the member's predecessor was appointed shall be appointed
only for the remainder of that term. A member of the Board may serve after the
expiration of that member's term until a successor has taken office.
(e)Compensation
and travel expenses
(1)Members
of the Board shall each be paid not less than the daily equivalent of level IV
of the Executive Schedule for each day (including travel time) during which
they are engaged in the actual performance of the duties of the Board.
(2)Each member of the Board shall receive travel expenses,
including per diem in lieu of subsistence, in accordance with applicable
provisions under subchapter I of chapter 57 of title 5, United States
Code.
(f)The members of the Board shall elect a Chairperson and
any other officers of the Board. The Chairperson and any such officers shall be
elected for a term of 2 years.
(g)The
Board may appoint and fix the pay of such additional personnel as the Board
considers appropriate. The staff of the Board shall be appointed subject to the
provisions of title 5, United States Code, governing appointments in the
competitive service, and shall be paid in accordance with the provisions of
chapter 51 and subchapter III of chapter 53 of such title relating to
classification and General Schedule pay rates.
(h)The Board may procure temporary and intermittent
services under section 3109(b) of title 5, United States Code.
8.Powers and
duties of the Board
(a)The
Board shall—
(1)award prize
payments for medical innovation in accordance with this Act; and
(2)submit a report
to the Congress under section 16.
(b)
(1)
(A)The Board may, for the purpose of carrying out this Act,
hold hearings, sit and act at times and places, take testimony, and receive
evidence as the Board considers appropriate.
(B)Not later than 30 days after the initial members of the
Board are appointed under section 7(b)(5) and confirmed, the Board shall
conduct its first meeting.
(2)
(A)Not later than 1 year after the initial members of the
Board are appointed under section 7(b)(5) and confirmed, the Board shall
establish such policies and procedures as may be appropriate to carry out this
Act.
(B)The policies and procedures of the Board shall require that
any determination of the Board be made by not less than a majority vote of the
members of the Board.
(C)Administrative
proceduresThe policies and procedures of the Board shall comply
with subchapter II of chapter 5 of title 5, United States Code.
(D)The
policies and procedures of the Board shall—
(i)comply with
sections 552 and 552b of title 5, United States Code (commonly referred to as
the Freedom of Information Act and the Government in the
Sunshine Act, respectively); and
(ii)ensure that the
proceedings and deliberations of the Board are transparent and are supported by
a description of the methods, data sources, assumptions, outcomes, and related
information that will allow the public to understand how the Board reaches its
criteria-setting and award decisions.
(3)Expert advisory
committeesTo assist the Board in carrying out this Act, the
Board shall establish independent expert advisory committees, including
committees on the following:
(A)Economic
evaluation of therapeutic benefits.
(B)Business models
and incentive structures for innovation.
(C)Research and
development priorities.
(D)Orphan
diseases.
(E)Financial control
and auditing.
(F)Open source
biomedical science.
(4)Powers of
members and agentsAny member or agent of the Board may, if
authorized by the Board, take any action which the Board is authorized to take
under this Act.
(5)The
Board may use the United States mails in the same manner and under the same
conditions as other departments and agencies of the United States.
9.Prize payments
for medical innovation
(a)For
fiscal year 2015, and each subsequent fiscal year, the Board shall award to
persons described in subsection (b) prize payments for medical innovation
relating to a drug, a biological product, or a new manufacturing process for a
drug or biological product.
(b)To
be eligible to receive a prize payment under subsection (a) for medical
innovation relating to a drug, a biological product, or a manufacturing
process, a person shall be—
(1)in the case of a
drug or biological product, the first person to receive market clearance with
respect to the drug or biological product;
(2)in the case of a
manufacturing process, the holder of the patent with respect to such process;
or
(3)in the case of
open source contributions, the persons or communities that openly shared
knowledge, data, materials, and technology on a royalty-free and
nondiscriminatory basis.
(c)The
Board shall, by regulation, establish criteria for the selection of recipients,
and for determining the amount, of prize payments under this section. Such
criteria shall include consideration of the following:
(1)The number of
patients who would benefit from the drug, biological product, or manufacturing
process involved, including (in cases of global neglected diseases, global
infectious diseases, and other global public health priorities) the number of
non-United States patients.
(2)The incremental
therapeutic benefit of the drug, biological product, or manufacturing process
involved as compared to existing drugs, biological products, and manufacturing
processes available to treat the same disease or condition, except that the
Board shall provide for cases where drugs, biological products, or
manufacturing processes are developed at roughly the same time, so that the
comparison is to products that were not recently developed.
(3)The degree to
which the drug, biological product, or manufacturing process involved addresses
priority health care needs, including—
(A)current and
emerging global infectious diseases;
(B)severe illnesses
with small client populations (such as indications for which orphan designation
has been granted under section 526 of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360bb)); and
(C)neglected
diseases that primarily afflict the poor in developing countries.
(4)Improved
efficiency of manufacturing processes for drugs or biological processes.
(5)The extent to
which knowledge, data, materials and technology that are openly shared have
contributed to the successful development of new products or improved processes
for manufacturing products.
(6)In the case of
antibiotics or other products for which drug resistance is a significant public
health problem, the expected life cycle benefits of the antibiotic or other
product, with appropriate adjustments that reward the conservation of the
resources, taking into account drug resistance that is related to use of the
product.
(7)In the case of
products used in stockpiles for potential threats to the public health, the
risk adjusted benefits of stockpiling the products.
(d)In
awarding prize payments under this section, the Board shall comply with the
following:
(1)In cases where a
new drug, biological product, or manufacturing process offers an improvement
over an existing drug, biological product, or manufacturing process and the new
drug, biological product, or manufacturing process competes with or replaces
the existing drug, biological product, or manufacturing process, the Board
shall continue to make prize payments for the existing drug, biological
product, or manufacturing process to the degree that the new drug, biological
product, or manufacturing process was based on or benefitted from the
development of the existing drug, biological product, or manufacturing
process.
(2)The Board may not
make prize payments based on the identity of the person who manufactures,
distributes, sells, or uses the drug, biological product, or manufacturing
process involved.
(3)The Board may
award prize payments for a drug, a biological product, or a manufacturing
process for not more than 10 fiscal years, regardless of the term of any
related patents.
(4)For any fiscal
year, the Board may not award a prize payment for any single drug, biological
product, or manufacturing process in an amount that exceeds 5 percent of the
total amount appropriated to the Fund for that year.
(5)For every drug or
biological product that receives market clearance, the Board shall determine
whether and in what amount to award a prize payment for the drug or biological
product not later than the end of the fourth full calendar-year quarter
following the calendar-year quarter in which the drug or biological product
receives market clearance.
10.Prizes for
priority research and development
(a)Minimum levels
of fundingFor fiscal year 2015, and each subsequent fiscal year,
the Board shall establish and may periodically modify minimum levels of funding
under section 9 for priority research and development.
(b)Of the amount appropriated to the Fund for a fiscal year,
the Board shall use (subject to the establishment or modification of an
applicable minimum level of funding under subsection (a)) not less than—
(1)4 percent of such
amount for global neglected diseases;
(2)10 percent of
such amount for orphan diseases; and
(3)4 percent of such
amount for global infectious diseases and other global public health
priorities, including research on AIDS, AIDS vaccines, and medicines for
responding to bioterrorism.
(c)Public input;
recommendationsThe advisory committee on research and
development priorities (established pursuant to section 8(b)(3)) shall—
(1)solicit public
input on research and development priorities; and
(2)periodically
recommend to the Board modifications in the minimum levels of funding for
prizes for priority research and development under this section.
(d)The
Board shall adopt procedures to establish and periodically modify minimum
levels of funding under section 9 for priority research and development.
11.Open source
dividend prizes
(a)In order to induce greater access and the open sharing of
knowledge, data, materials and technology, at least 5 percent of the prize
payments from the Fund shall be dedicated to Open Source Dividend
prizes.
(b)
(1)The Board of Trustees shall adopt procedures for the
allocation of Open Source Dividend prizes. Such procedures shall—
(A)be fully
transparent regarding the process for evaluating the value of open sharing of
knowledge, data, materials, and technology;
(B)reward the open,
nondiscriminatory and royalty-free sharing of knowledge, data, materials, and
technology that has contributed to the development of the new drugs, biological
products, or manufacturing processes that are rewarded under sections 9 and
10;
(C)in the case of
rewards for contributing to the development of new drugs, biological products,
or manufacturing processes rewarded under sections 9 and 10, provide for a
time-limited period of nominations for persons or communities whose
contributions were considered useful, including the evidence to support such
nominations to describe the significance of the contribution; and
(D)provide for rules
and procedures to protect against conflicts of interest.
(2)Public
availability of nominationsThe nominations described in
paragraph (1)(C), and the evidence supporting such nominations, shall be
public. The public shall be allowed to provide commentary and additional
evidence on such nominations before awards are made.
12.Competitive
intermediaries for funding interim technologies
(a)The Board of Trustees may authorize multiple nonprofit
intermediaries to reward projects for interim research and development of
products, or for open source dividend prizes. Such intermediaries shall compete
for funding from non-Federal entities that co-fund the Fund.
(b)Prizes
awarded by competitive intermediaries shall be available to persons or
communities that provide open, nondiscriminatory and royalty-free licenses to
relevant intellectual property rights.
(c)The
Board of Trustees shall adopt rules to ensure the transparency and
accountability of any entities authorized to act as competitive intermediaries
under subsection (a).
13.
(a)A drug or biological product that is on the market on
October 1, 2014, shall remain eligible for prize payments for not more than 10
fiscal years, consistent with section 9(d)(3).
(b)In determining the amount of a prize payment for a drug
or biological product described in subsection (a), the Board shall calculate
the incremental value of the drug or biological product as of the date on which
the drug or biological product was first introduced in the market.
(c)With respect to drugs and biological products described in
subsection (a), the Board may award—
(1)of the amount
appropriated to the Fund for fiscal year 2015, not more than 90 percent of such
amount; and
(2)of the amount
appropriated to the Fund for each of the succeeding 9 fiscal years, not more
than a percentage of such amount that is equal to 9 percent less the percentage
applicable to the preceding fiscal year under this subsection.
14.In the case of a drug that is on the market
on October 1, 2014, and subject to patents owned by a party other than the
person who first received market clearance for the drug, the Board shall
establish an arbitration procedure to determine an equitable division of any
prize payments under this Act among the patent owners and the person who first
received market clearance for the drug.
15.
(a)The
Comptroller General of the United States shall conduct an audit of the Board
each fiscal year to determine the effectiveness of the Board—
(1)in bringing to
market drugs, vaccines and other biological products, and new manufacturing
processes for medicines in a cost-effective manner; and
(2)in addressing
society's medical needs, including global neglected diseases that afflict
primarily the poor in developing countries, indications for which orphan
designation has been granted under section 526 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360bb), and global infectious diseases and other global
public health priorities.
(b)The
Comptroller General of the United States shall submit a report to the Congress
each fiscal year on the results of each audit conducted under subsection
(a).
16.Not later than 1 year
after the date of the enactment of this Act, the Board shall submit to Congress
a report containing the findings, conclusions, and recommendations of the Board
concerning the implementation and administration of this Act, including
recommendations for such legislative and administrative action as the Board
determines to be appropriate.
17.
(a)
(1)For fiscal year 2015, there are authorized to be
appropriated to the Fund, such sums as may be necessary to carry out this
Act.
(2)For fiscal year 2015 and each subsequent fiscal
year, there is appropriated to the Fund, out of any funds in the Treasury not
otherwise appropriated, an amount equal to the amount that is .55 percent of
the gross domestic product of the United States for the preceding fiscal year
(as such amount is determined by the Secretary of Commerce).
(b)Funds
appropriated to the Fund for a fiscal year shall remain available for
expenditure in accordance with this Act until the end of the 3-year period
beginning on October 1 of such fiscal year. Any such funds that are unexpended
at the end of such period shall revert to the Treasury.
18.Imposition of
annual fee on health insurance providers
(a)
(1)Each covered entity engaged in the business of providing
health insurance shall pay to the Secretary not later than the annual payment
date of each calendar year beginning after 2014 a fee in an amount determined
under subsection (b).
(2)For purposes of this section, the term annual payment
date means, with respect to any calendar year, a date determined by the
Secretary, which in no event, may be later than September 30 of such calendar
year.
(b)Determination
of fee amountWith respect to each covered entity, the fee under
this section for any calendar year shall be equal to the amount determined
under section 17(a)(2), multiplied by the ratio of the covered entity’s net
premiums written with respect to health insurance for any United States health
risk taken into account under subsection (c) during the preceding calendar
year, to—
(1)the sum of net
premiums for all covered entities; and
(2)all Federal
outlays on health insurance or reimbursement of health care costs, excluding
the costs of long term care.
(c)Amounts taken
into accountFor purposes of paragraph (b), the net premiums
written with respect to health insurance for any United States health risk that
are taken into account during any calendar year with respect to any covered
entity shall be determined as follows:
(1)With respect to a
covered entity’s net premiums written during the calendar year that are not
more than $25,000,000, the percentage of net premiums written that are taken
into account is 0 percent.
(2)With respect to a
covered entity’s net premiums written during the calendar year that are more
than $25,000,000 but less than $50,000,000, the percentage of net premiums
written that are taken into account is 50 percent.
(3)With respect to a
covered entity’s net premiums written during the calendar year that are
$50,000,000 or more, the percentage of net premiums written that are taken into
account is 100 percent.
(d)
(1)For purposes of this section, the term covered
entity means any entity which provides health insurance for any United
States health risk.
(2)Such
term does not include any governmental entity.